What Is a Closing Disclosure in Real Estate?

A Closing Disclosure (CD) is a five-page form that outlines the final loan terms, closing costs, and credits in a real estate transaction. It replaced the older HUD-1 Settlement Statement for most mortgage loans after the TRID rule took effect in 2015.

📄 What the Closing Disclosure Includes

  • Loan terms: interest rate, monthly payment, and prepayment details.
  • Closing costs: lender fees, title charges, prepaid taxes, and insurance.
  • Cash to close: the total amount due from buyer or due to seller at settlement.
  • Transaction summary: credits, prorations, and adjustments that finalize the deal.

🏡 Why the Closing Disclosure Matters for FSBO Sellers

Even though the lender prepares the Closing Disclosure for the buyer, FSBO sellers should review it carefully to confirm credits, commissions, and closing costs are accurate. Errors can delay closing or affect your net proceeds.

  • Check your seller credits and prorations for taxes or HOA dues.
  • Verify that the buyer’s agent commission matches your flat fee MLS agreement.
  • Confirm your payoff balance and proceeds before signing.

⚖️ Closing Disclosure vs. HUD-1

  • Closing Disclosure: used for most consumer mortgage loans (since 2015).
  • HUD-1: still used for cash purchases, reverse mortgages, and certain commercial transactions.
  • Delivery rule: buyers must receive the CD at least 3 business days before closing.

If you’re selling FSBO, your title or escrow company will send you the seller version of the Closing Disclosure.